M&As in S. Korea reaches highest level in 11 yrs in 2018

Merger and acquisition (M&A) activities in South Korea last year were at their fullest in 11 years amid restructuring and rationalization in the industrial transitional period.

The number of M&As registered with the Fair Trade Commission (FTC) totaled 702, up 34 from a year ago. It is the highest figure since 857 cases in 2007. The combined value of the deals was 22.8 trillion won ($20.2 billion) smaller than a year ago at 486.6 trillion won.

Reorganization in companies with total assets or annual turnover of 300 billion won or more and the M&A targets with total assets or annual turnover of 30 billion won or more must report the changes to the FTC for approval.

The FTC said that the number of merger and acquisitions rose as Korean companies reorganized their business portfolios amid growing uncertainties in the global economy. The number of large-scale mergers, however, declined.

Data showed that of total mergers, the number of deals involving Korean companies and domestic and foreign firms reached 570, up 56 from a year ago. Their combined value fell 10.2 trillion won to 43.6 trillion won.

Last year, there were no large-scale mergers valued at 5 trillion won or more, unlike in 2017 that included blockbuster deals like the 9.3 trillion won purchase of Harman International by Samsung Electronics Co. and 19.3 trillion won deal involving Seoul Metro Corp. and Seoul Metropolitan Rapid Transit Corp. The number of mergers among companies and their affiliates, meanwhile, rose 44 to 199 last year.

Korean large companies with 5 trillion won or more in total asset were engaged in 208 M&As last year, up 73 from a year earlier, with combined value up 3.6 trillion won to 22.5 trillion won. Among them, 111 were deals involving affiliates, down 43, with value of those mergers up 11.4 trillion won to 18.7 trillion won in 2018. There were 97 mergers last year involving non-affiliates, up 30 from a year ago, with combined value falling 7.8 trillion won to 3.8 trillion won.

The number of mergers involving foreign companies buying Korean firms came to 37 in 2018, down 4 from a year ago, with combined value falling 4.6 trillion won to 5 trillion won. Companies in the European Union bought 9 Korean firms while Chinese firms bought 6, Japanese firms acquired five, and American firms four Korean companies. The FTC analyzed that foreign companies were engaged in the deals last year mainly to secure technology and make inroads into the Korean market. Major deals last year include Xingwei Korea’s purchase of Kumho Tire and L’Oreal of Korean make-up and fashion company Nanda.